Four benefits of automating insurance interactions with AI

Insurance began as a social good. Over many decades, however, consumer trust in the industry eroded as policies became increasingly complicated, insurers became more aggressive in resolving claims, and customer service suffered.

Today, advancements in natural language processing and machine learning algorithms are enabling machines to create human-like, digital conversations. And while the technology is still in its infancy, these smart machines are already able to interact directly with customers for both sales and service. In A.T. Kearney’s work with insurance companies at the forefront of automation, we see that this technology can help regain the erosion of trust, serving to ease the regulatory, communication and staffing challenges large carriers face. Automation can help insurance companies become the responsive, helpful, and reliable resources that customers seek.

We see four primary benefits of automated intelligent interactions for insurance companies.

1. Natural and seamless digital interactions that can solve basic customer problems.Even at this early stage of development, automation can address customers’ basic needs—from password changes to small claims—more quickly and cost-effectively than call centers that often involve wait times and language barriers, or unsophisticated web-based systems. The Amazon Echo, for example, can provide a Liberty Mutual auto insurance quote in only two minutes, compared to the 10 minutes required to get the same quote on the company’s website.

2. Deeper and more personalized interactions for more complex issues. Automation allows call center staff to converse with customers more meaningfully and responsively during the high-value interactions that matter most. Automation can provide real-time, personalized next-best-message prompts for staff that allow them to address a customer’s concern with a tailored solution or close a sale more effectively, enhancing the interaction and strengthening the relationship.

3. Lower costs and increased control over customer interaction. As companies are increasingly able to scale automated interactions, they will be able to cut costs by reducing call center staffing and in-sourcing functions that were previously outsourced. This shift will enable them to have greater control over their customer interaction strategies and reduce their vendor management costs. We find that insurance companies that automate portions of their call center operations can expect to achieve more than 50 percent savings in some aspects of call center operations.

4. Growth in existing products and establishment of new revenue streams. Streamlined customer service and deeper customer relationships will improve customer retention, and automation can also be used to prompt salespeople for more effective cross-selling and up-selling of existing products. New revenue streams without increased operational costs may also be created when companies extend higher-end products to the low end of the market by replacing humans with automated interactions.

In many ways, customers are primed for this change. People engage in automated interactions daily, routinely responding to chatbots online or via text, and using Amazon Echo, Google Home, and Apple’s Siri. Customers have come to expect digital conversations to be productive and efficient. In the insurance industry, however, the transition from human sales and service to digital interactions may be less straightforward.

While consumers are increasingly comfortable with technology-enabled interaction for sales of basic goods, insurance is a complicated and expensive product that can significantly impact people’s lives. A.T. Kearney’s 2017 Future of Advice Study indicates, in fact, that consumers currently are not yet comfortable with automated interactions when purchasing insurance. In a survey of approximately 3,500 consumers, 76 percent of all respondents—and 81 percent of Millennials—reported that it is important to consult with a human when they are purchasing auto insurance. There is more work to do, then, to convince consumers to fully adopt automated interactions during the insurance purchasing experience. And the implementation of this automation must be sensitive to these concerns and sufficiently seamless to change consumer opinion.

Incorporating these technologies into existing operations will take time. Companies must develop the right capabilities, operating model, and channels to make an investment in automated interactions worthwhile. An agile approach that defines a minimum viable product, incorporates learning into the development process, and establishes a continuous feedback loop to evolve the product will allow both internal operations and customers to become accustomed to new engagement models. The ability to deliver ubiquitous, human-like digital interactions has arrived, and those brands that stake a claim early will develop the responsiveness and personalization that will build trust in consumers—and will capitalize on the cost savings and revenue enhancement the technology promises.

Michael Freilich is a Principal with A.T. Kearney in the Financial Institutions Practice. He has spent his career as a consultant helping insurance companies execute transformational change. He has a wealth of experience across the insurance value chain, focusing on distribution strategy, front-office transformation, and agency effectiveness. Most recently Michael has been helping clients navigate the insurance innovation landscape.

Michael Freilich is a Principal with A.T. Kearney in the Financial Institutions Practice. He has spent his career as a consultant helping insurance companies execute transformational change. He has a wealth of experience across the insurance value chain, focusing on distribution strategy, front-office transformation, and agency effectiveness. Most recently Michael has been helping clients navigate the insurance innovation landscape.

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